from the about-time! dept

For quite some time, we've been calling out recording industry insiders and their ridiculous stats concerning "losses" from piracy and the like. The most common pattern is to not count where displaced money goes, and if it still benefits the industry. So, for example, many studies would count every downloaded copy as a "lost sale," but would never take into account if that download resulted in the downloader deciding to go to a show and shell out a bunch more cash on merchandise. We're not saying that always happens, but most of the industry studies would only count data that supported their basic premise that the music industry was in trouble and "something must be done." That's highly misleading -- especially when such numbers are then used to make policy.

So consider me a bit surprised to see the following report (thanks Ian) out of the UK, from PRS's economists, Will Page and Chris Carey, where they try to look more closely at the real numbers and conclude that for all the whining and complaining, the UK music industry is actually growing (warning:pdf).

Let me repeat that: despite all of the whining and complaining about the state of the music industry, some of the music industry's own economists are admitting that the market is growing.

Not surprisingly, it found that retail product sales have declined, but the other parts of the industry have grown noticeably more than the decline in retail sales. This growth has come from a few sources. Live show attendance has increased more than retail sales have decreased. Consumers have actually spent more. On top of that, the business to business side of the industry (sponsorships, licensing, advertisements, etc.) has grown as well, opening up new and lucrative means of making money.

Admittedly, there are some facts that could potentially temper the results: including claims of the rather uneven distribution of live revenue (big acts get a lot, others perhaps not as much) and worries that without enough support for smaller acts they won't ever be able to get big enough to make that kind of revenue. So, the fear is that it's all just "legacy acts" that are touring and making money, rather than new acts being encouraged the to get big. This is a charge some others have raised in the past, and it certainly bears watching, though I believe, pretty strongly, that it's an issue that works itself out as various additional business models get developed.

Still, it's quite amazing to see that a music industry study (even one from a non-profit like PRS) actually admits that the overall industry is actually growing.

Well, first off, you have to look at it overall: is it up dollars spent or actual attendance and units sold? Concert tickets have more than doubled in price in the last 5 years, which means the same numbers of seats sold means twice the number of dollars of sales (huge increase).

Also in the UK, there is a huge festival market, and a made at home pop and rock market that is unusual for the rest of the world (in terms of physical size).

So the question would be: Are the actually selling that many more concert tickets, or just selling them for the significantly higher price?

Another question

Could it also be that indie bands and artists are actually taking away market share from the big three. Promotion today is as easy as giving your music away and doing some facebooking / YouTubing / MySpacing

Right to Exist

". . . music industry was in trouble and 'something must be done.'"

Even if the "failing" premise were true, why is the conclusion "something must be done". I dont get it? Is the record industry now too big to fail . . . good riddence I say, couldnt happen to a more deserving group.

Re: Right to Exist

Big Brother / Big Sister

If the fear that the music industry will die with the death of legacy bands, why not turn the record labels into a Big Brother / Big Sister sort of set up - matching up and coming bands with great tours.

Gasp, that would actually benefit the artists and continue making money for everyone involved. Clearly the industry needs to evolve and it would be nice to see them be nicer.

The amazing thing is that the industry continues to grow despite their attempts to kill themselves. Just imagine how much better off they would be if they had just left things to progress on their own, never mind trying to actively grow the industry using good business practices!

OK you lost me

If the recording industry is worried about the big bands taking all the thunder and the little bands not getting their chance, isn't that a problem with the recording industry not booking the little bands? It's not like they can't figure out what's good. Between iTunes, napster, pandora, facebook, myspace, hell even P2P traffic numbers, there should be plenty of proof of what people like. In fact the numbers should be more accurate than just the old CD sales numbers. So yeah, you lost me, how is losing the retail market going to damage anything?

Heh. The argument about the "big" acts getting all the money has been made for A VERY LONG TIME.

And I always considered it a result of the dynamic that companies can make more money with sales of a billion units from one (semi-talented, label-created) act than from a 100k units from a thousand smaller (actually creative, independent and intelligent and therefore prossibly more fractious to deal with) acts.

As a record company, would you rather have ONE Britney or a hundred Mark Sandmans/Tom Waits/Bela Flecks/Edgar Meyers??

As someone who loves music, I know which I prefer, but if I were a record company executive (sleazy, greedy, shallow, soulless and with no love for music) I'm sure it would be obvious that the pile of money will be larger and more easily accessible with just a couple of Britney/Ashlees.

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The correct answer is that most labels have a combination of "big acts" that pay much of the freight, and then they dabble and speculate in up and coming acts, lesser known artists, and some fringe acts.

In the past, record labels would often open up boutique sub-labels to handle a type of music or to address a smaller market. However, under the current circumstances, it is getting harder and harder for the labels to get involved in marginal acts, which contributes to the "rich getting richer" situation.

Further, this is one of the side effect of the "masnick theory" of music. CwF + RtB has a very simple requirement, fans. When it comes to having fans, the bigger the act, the more they have fans. It is why I often comment on Mike drooling over Trent Reznor's latest "business model", because Trent has so much "F" to work with, that even if he can connect with 0.001% them, he still has a huge pile of people. Most acts starting out don't have that. So in the end, the rich get richer under the Masnick theory as well, and the poor still get beer money. Instead of getting their beer money from selling CDs, now they are expected to sell t-shirts or play miniputt. The end result is about the same.

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...wait, what? All consumer based models require "fans", I have no clue why you think that's a sole flaw in Mike's model.

And...uh, most starting acts don't have a huge fanbase? Yeah, that's kind of a given. I mean, most starting acts have no fanbase at all. I'm not sure how selling 1000 CD's lets you grow your fanbase faster than posting your music up for free on YouTube.

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Wait...so, you're saying that the "Masnick theory" is just as effective as the current business models? Only it doesn't screw customers over and is actually effective for the long-term? Understood...I also understand that society can only support so many musicians at a given time. Some are going to always be playing for beer money. Society as a whole has no responsibility to someone who can't comprehend that he actually isn't talented. Then again, those who work hard over time may actually convince society that they are wrong. Ya...sure...I can come up with lots of anecdotal instances where someone who was talented got screwed, but that happens no matter what you do.

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Nope, I am saying that the Masnick Theory in the end contributes to making the rich richer and the poor poorer, because it effeictively removed the first couple of rungs off the ladder, and leaves all the little unknown artists swimming in a sea of "not enough fans to complete the equation". All the reasons to buy don't mean much if nobody knows you.

The rampant file swapping and such also have a very negative effect on the whole process, making it harder for record labels to take a risk on new artists, on marginal artists, etc. Again, the established artists keep going, but now there are rungs missing out of the ladder at the bottom, making it nearly impossible for new acts to crawl out of the muck. Why do you think that we are sitting here looking at albums from Eminem, Mariah Carey, and Whitney Houston all within a few months of each other? Nothing new coming in the bottom, so the rest is being recycled.

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Nope, I am saying that the Masnick Theory in the end contributes to making the rich richer and the poor poorer, because it effeictively removed the first couple of rungs off the ladder, and leaves all the little unknown artists swimming in a sea of "not enough fans to complete the equation". All the reasons to buy don't mean much if nobody knows you.

Almost no evidence to support that claim, and plenty to support the alternative. More artists than ever before are making music. More artists than ever before are marking money from music. More artists than ever before are making a living wage from music.

You are just wrong (again).

Also, if you look at analogs, again, it shows the opposite of what you claim. Removing artificial barriers like IP tends to lead to a lot more smaller players being successful, rather than single large entities being massively successful, because those large entities can't hoard. A perfect example: the pharma industry in Italy pre-patent. Highly competitive with hundreds of small to mid-sized firms. Once patents put in place? Massive consolidation into just a few massive conglomerates.

But... of course, you're the same guy who we spent a good week trying to explain marginal cost to and you still couldn't grasp the difference between that and average cost, so why do I get the feeling you still won't get this?

a lot of hot air

"Almost no evidence to support that claim, and plenty to support the alternative."

Where? Where is the evidence you speak of? Oh yeah, I forgot...we should look around, it's there everywhere, right?

"More artists than ever before are making music. More artists than ever before are marking money from music. More artists than ever before are making a living wage from music."

More and more hot air. Why do you keep repeating those empty statements, Mike? Are more artists making more money than before? Do you have the evidence? All you know is Trent Reznor, Amanda Palmer and Jill Sobule. Can you name 100 artists who have made 1 million using CWf whatever? After all, if more and more are making more and more music and more and more money, it shouldn't be all that difficult to name them. We are still a loooooong way off from seeing this blip translate into a trend. There's no trend here, just wishful thinking.

Re: Re: a lot of hot air

I am not claiming anything here. Mike is. So, the onus of providing evidence is on him. Do you understand? Or is it beyond you? Since you seem to be so fond of whatever BS Mike spouts, why don't you provide any evidence? Why do you guys get so worked up the moment people start asking for evidence?

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Could you point me in the direction of those statistics? I'd love to see them.

There's a research report that's coming out shortly (I got a draft copy). I'll post about it here once it comes out.

It's quite good. It finds that in the "old" system, very very few artists made a "living wage" from music. These days the numbers are much more reasonable, as a lot of the money isn't coming from the old label system, but these newer models (mostly touring, of course).

Re: Right to Exist

I could'nt agree more.......the industry has had it comming for a long time....fuled by greedy people,greedy artists and the whole get more spend more mentality that the western world indulges in.....i for one think its about time....there no way artists desreve to make the millions they do.....there is a much larger issue here!!!

Interesting Read

I have been saying for a while now that the future of Music worldwide is in Live Entertainment, even small pubs are jumping on the band wagon. Record Labels are buying venues and Gig sites are cropping up all over the place. About time!

Music and Soul

It is great that music industry is growing. Nowadays, various themes for music are arising. Different music, different genres, different theme. For that reason we whould be choosy on what we patronize and people should be responsible also for this matter. We all know that music is the language of the soul so make music that has sense and can be an inspiration to the listeners, let's practice being a responsible individual. Cuisinart Coffee Machine